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CAA to delay new financial tests for Atol holders

The CAA will delay introduction of new financial tests for Atol holders, previously due to come in from October.

The tests will not now come into force for new Atol holders until April 1 next year and apply to existing licence holders from September 2016.

The CAA announced the delay on Tuesday, saying: “Our decision to retain the Small Business Atol (SBA) meant the development of the tests has been more complex than expected.

“Although this has resulted in only a limited delay, we judged it best not to rush the change to the potential detriment of Atol holders.”

Full details of the new tests should now be available by September.

The CAA outlined new financial reporting arrangements for Atol holders in a document on rebalancing Atol published in March.

This followed a consultation last year and promised details of the new financial tests this May, with the tests to be introduced from October 1.

The CAA said: “We have now decided to delay the implementation of the financial April 1 2016.

“This means they will first apply to existing licence holders during the Atol renewal round which ends in September 2016. However, the tests will be applied to new applicants for Atols from April 2016.

“The CAA believes it is essential the new tests are appropriate to the size of business and can be introduced in the planned online format without disruption to licence holders.

“We will announce full details of the new tests before the end of September, providing at least 12 months' notice to companies affected by the changes.

“The announcement will include an updated Financial Policy note that sets out the new tests applicable to SBAs and standard Atol holders licensed for less than £5 million.”

It added: “The CAA will work with travel trade organisations to make sure their members understand the new tests.

“The introduction of the solvency test for SBAs will require some licence holders to change their Atol-renewal date to fit in with their financial reporting cycle. Licence holders who are affected will be contacted about this change when they next renew their licence.

“All other changes to Atol as part of the rebalancing programme are proceeding as planned.”

Alan Bowen, legal advisor to the Association of Atol Companies, said: “Bearing in mind the CAA announced this in March and have had four months to put together the tests, it’s rather disappointing.”

He suggested that either the insolvency tests had been found to be too weak and to risk letting financially fragile firms through, or they were too stringent and could have put firms out of business.

Bowen said the autumn Atol renewal would be easier for small Atol holders as a result of the delay, adding: “It does give more time to get accounts into a fit state to meet the insolvency tests.”

But he expressed concern at the decision being made at such a late stage in a process meant to ensure the financial solvency of those Atol holders representing the greatest risk.

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